The Federal Reserve Bank of New York released the results of its Survey of Consumer Expectations for December.
Prepared by the NY Fed’s Center for Microeconomic Data, the survey shows that inflation expectations were unchanged at the short-term horizon, increased at the medium-term horizon, and decreased at the longer-term horizon.
Further, it showed that the average perceived likelihoods of a job loss, voluntary job separation, and finding a job in the event of a job loss all declined. In addition, household income growth expectations declined slightly and are now comparable to their pre-pandemic levels. However, spending growth expectations increased and remain well above pre-pandemic readings.
On inflation, median inflation expectations were unchanged at 3.0 percent at the one-year horizon and increased to 3.0 percent from 2.6 percent at the three-year horizon. In the five-year horizon, expectations dropped to 2.7 percent from 2.9 percent.
Also, commodity price expectations for food for the year ahead increased by 0.2 percentage points to 4.0 percent, while price expectations for other commodities declined. Specifically, year-ahead price expectations fell by 0.7 percentage points for gas to 2.0 percent, which is the lowest reading since September 2022. It also dropped by 1 percentage point for the cost of college education to 5.7 percent, by 0.2 percentage points for the cost of medical care to 5.8 percent, and by 0.2 percentage points for rent to 5.5 percent.
Regarding the labor market, the median one-year-ahead expected earnings growth decreased by 0.2 percentage points to 2.8 percent. Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—declined by 0.4 percentage points to 34.6 percent, while the mean perceived probability of losing one’s job in the next 12 months declined by 1.6 percentage points to 11.9 percent.
On household income, the median expected growth in household income declined by 0.3 percentage points to 2.8 percent, the lowest reading since May 2021. Median household spending growth expectations increased by 0.1 percentage points to 4.8 percent, remaining well above pre-pandemic levels.